Panama Canal Agreement: How the U.S. Counteracts China’s Growing Presence

Military ship moving fast on the ocean — military ship

Defense Secretary Pete Hegseth secures critical “first and free” passage rights for U.S. vessels through the Panama Canal, directly countering China’s growing influence in America’s strategic backyard.

Key Takeaways

Defense Secretary Hegseth’s diplomatic mission to Panama resulted in guaranteed priority passage for U.S. warships through the vital Panama Canal.
The Panama Canal handles over 40% of U.S. maritime trade, making it crucial to national security and economic interests.
China’s increasing investments and influence around the canal prompted decisive U.S. action, including Panama’s exit from China’s Belt and Road Initiative.
The agreement includes expanded U.S. military presence in Panama and strengthened bilateral defense cooperation.
Panama resisted Chinese pressure and chose to strengthen its strategic partnership with the United States.

Strategic Victory for U.S. Interests

Defense Secretary Pete Hegseth’s recent diplomatic mission to Panama yielded a significant victory for U.S. strategic interests with the securing of “first and free” passage rights through the Panama Canal. This landmark agreement ensures American warships receive priority access through one of the world’s most crucial maritime chokepoints. The canal, which handles over 40% of U.S. maritime trade, has long been vital to American economic and defense strategies since its opening in 1914, providing a critical shortcut between the Atlantic and Pacific Oceans.

The diplomatic breakthrough comes amid growing concerns about China’s expanding influence in Latin America and specifically around the Panama Canal. In recent years, Chinese state-owned companies had aggressively pursued investments and infrastructure projects throughout Panama, raising alarms in Washington about potential threats to U.S. access to this strategic waterway. The Trump administration identified countering this influence as a priority early in its term, resulting in this significant diplomatic achievement.

Pushing Back Against Chinese Influence

The agreement represents a significant reversal of Chinese gains in the region. Earlier diplomatic efforts by Secretary of State Marco Rubio successfully persuaded Panama to withdraw from China’s global Belt and Road Initiative. Additionally, a Hong Kong-based conglomerate recently sold two strategic ports along the canal to a U.S.-led consortium, despite reported Chinese attempts to delay the transaction. These developments reflect a coordinated U.S. strategy to protect its hemispheric interests from foreign encroachment.

“This trip not only met but exceeded our expectations. A warm welcome from Panama. Great partnership. Spent a lot of time with their troops. I want to thank Panama for what they’ve done in the Darien Gap as well.” Pete Hegseth

Hegseth’s visit included extensive meetings with Panamanian leadership and tours of former U.S. military bases and canal facilities. The comprehensive itinerary underscored the seriousness with which the administration approaches canal security. Beyond securing passage rights, the visit resulted in an expanded security partnership agreement that will see increased U.S. military presence in Panama focused on joint training, equipment modernization, and coordination on regional security threats.

Diplomatic and Economic Implications

The Chinese government reacted negatively to the strengthened U.S.-Panama relationship, with state media accusing the United States of “blackmail” and diplomatic pressure tactics. However, Panamanian officials affirmed their decision was based on sovereign interests and long-standing ties with the United States. This outcome represents a significant setback for Beijing’s ambitions in the Western Hemisphere and demonstrates the effectiveness of Washington’s diplomatic approach in the region.

“If you look at the context countering Chinese spheres of influence around the world, this is a good example of actions taken by the secretary and by this team about how we align perfectly within the realm of that strategy.” A senior defense official

Senior defense officials credited the Trump administration’s focus on strengthening alliances for creating opportunities to counter Chinese influence globally. The Panama Canal agreement exemplifies this approach, combining diplomatic engagement with concrete security cooperation. Secretary Hegseth expressed confidence in America’s ability to deter potential adversaries, emphasizing that securing vital maritime pathways remains essential to U.S. national security strategy and global trade stability.